Preparing personal budget

How To Create a Monthly Personal Budget

“The more I make, the less I got… I don`t get it, Where`s my money?!!”
You’ve received your paycheck, and you know how much money you have coming in this month. But do you know where it all goes? It’s no surprise that many people don’t track their expenses very well, but even if you do, it can be difficult to plan ahead when your income fluctuates from month to month. In this guide on how to create a monthly personal budget, we’ll show you how to properly track your spending so that you have a solid foundation from which to plan your future spending habits.

Preparing personal budget

1) Explore your actual money habits
Before you can learn how to create a monthly personal budget, you need to explore your actual money habits. Take time each month to add up your expenses and see where all of your money is going each month. You may be surprised by what you find! Write out what you typically spend on rent, groceries, gas, cell phone bills, coffee from Starbucks, and anything else that requires cash. If it’s not in your physical possession or if it’s a recurring bill every month (like cable or Netflix), write down an estimate so that you can easily compare between months.

2) Simple List of Monthly Expenses
A budget spreadsheet is one of several tools you can use to help create and stick to your monthly budget. With it, you’ll be able to list all of your expenses and income in one place. You can then plan accordingly and ensure that every dollar counts. As part of your budget, include sections listing each type of expense: housing costs (rent or mortgage), transportation costs (gas, maintenance, and insurance), groceries, utilities and other home expenses, clothing and household supplies, entertainment costs (movies or meals out), medical costs (doctor bills or prescriptions) and so on. If you have variable expenses such as car repairs or travel costs, create an unexpected category so you can plan ahead if possible.

3) Spending Tracker
To start calculating your monthly personal budget, you’ll need to know what you’re working with. This means tracking your current income and expenses so that you can set realistic goals. While there are plenty of tools available online, there are also simple downloadable spreadsheets that will help you track how much money is coming in and going out each month.

4) Use Online Calculators
Sometimes you don’t need a spreadsheet at all. Most financial institutions will offer you, free personal finance calculators, right on their websites. These tools can walk you through everything from figuring out how much you should be saving each month to deciding whether it makes sense to pay off your debts or invest more in your retirement fund. If you have questions, they also have customer service representatives that can help lead you in the right direction.

5) What is the 50/30/20 Rule?
The 50/30/20 Rule is just one of many budget methods out there, but it’s simple and practical. Here’s how it works: Fifty percent of your take-home pay goes toward essentials like rent, utilities, groceries, and transportation. Twenty percent goes toward wants like dining out or shopping. The remaining 30% is what you get to save or spend on experiences. As you begin making more money, don’t be afraid to adjust your percentages accordingly so you can stay on track with your goals while enjoying life more—because that’s really what living within your means is all about. You can also check out online tools that keep track of spending automatically.

Personal Budget Chart

6) Review your Budget every Year
Creating a personal budget takes time, but it doesn’t have to be painful. Budgeting once per year is just as effective as creating one monthly budget, according to research by NerdWallet. A yearly review also allows you an opportunity to adapt your budget based on any changes in income or expenses that have occurred since you created your plan—and can help remind you of why it’s important to stick with your spending goals. A review every year will keep you on track and make adjustments easier when they are needed. If you find that changes are happening more frequently than once per year, consider creating multiple budgets throughout the year instead of one big plan.

A personal budget allows you to organize your expenses and income. A personal budget can help people with their money management by giving them an overview of their income and expenses, which makes it easier for them to plan their spending habits. It’s important that all your financial transactions are documented, especially if you need proof of payment for tax purposes. Having all of your records in one place will help keep your finances organized so you can have more control over your monthly budget. With some dedication and planning, anyone can create a positive budgeting habit that will have lasting benefits on both your financial situation and overall happiness.